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Last year, the Government announced changes to Individual Savings Accounts (ISA), which came into effect in April this year. The rules on ISAs, different types of savings accounts, your savings allowance and whether or not you can move your savings within a tax year, are all complex. Here, we explain the main ISA changes and how they may affect your savings this tax year.
Of the new ISA rules for 2024, the biggest one is that you can now pay into more than one of each type of ISA within a tax year. In previous tax years, you wouldn’t have been able to have more than one Cash ISA for example, but now you can.
There are some restrictions. Savers can only have one Junior ISA and one Lifetime ISA (LISA). This ISA change isn’t mandatory, and you may find some lenders will still restrict you to one ISA. It is important you know what you’re entitled to and you should always shop around for the best deals, and best interest rates.
The individual ISA allowance is still £20,000, which means you can save £20,000 tax-free. It is important to keep track of how much you pay into your ISAs throughout the tax year. This is especially the case now you can pay into more than one of each ISA type. Make sure you don’t exceed the £20,000 ISA allowance no matter how many ISAs you have.
The new UK ISA was announced last year. When launched, this will give each person an additional £5,000 allowance on top of the £20,000 annual ISA allowance. The only stipulation we know of is that the extra £5,000 must be invested in the UK to support British businesses.
If everything is on track, the Government will have recently concluded its consultation on the new British ISA. We can expect to hear more in the coming months but in the meantime, here is what we already know about the new British ISA.
From 5th April 2024 onwards, the age you can open a Cash ISA increased from 16 to 18 years old. This means anyone 17 or under can’t open more than one Cash ISA.
There are transitional arrangements that end on 5th April 2026. These allow 16 and 17-year-olds to retain a single Cash ISA until they are 18. When they turn 18, they can have more than one ISA.
For those younger than 18, there is also the option to open a Junior ISA. The Junior ISA allowance for the 2024/25 tax year has stayed at £9,000.
This is another change that will be at the lender’s discretion. Under the new rules, you are now allowed to make a partial transfer from one ISA to another within the same tax year.
Before the ISA changes in 2024, savers had to either transfer in full or leave their ISAs alone until the end of the year. Now they have more control over their savings and can choose how much they transfer and when.
Junior ISAs and Lifetime ISAs (LISA) are not included here. If you wish to transfer funds from either of these, you must still transfer in full.
If you have an existing ISA but have not paid into it for a year, you no longer need to reapply for that ISA. This change is designed to cut down the administration of opening an ISA, making things much smoother for you. If you have an ISA from a previous tax year, and want to continue to pay into it again, you can.
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